Obama Releases College Affordability Plan

8/26/2013

On August 22, President Obama announced his latest plan[PDF] to make college more affordable, a multi-faceted initiative that combines new and existing proposals to reduce the price of getting a high-quality college degree. College affordability has been on the Obama administration’s agenda for some time, but the ambitious “Better Bargain for the Middle Class” plan is much broader in scope and contains elements that are certain to be controversial. On the same day, AACC released a statement[PDF] on the plan.

In general, Obama’s plan focuses on increased consumer information for students, technological innovation to lower the cost of education, shortening time to degree, and steering student aid and other resources on the basis of institutional performance. The plan is divided into three areas: “Pay Colleges and Students for Performance,” “Promote Innovation and Competition,” and “Ensure Student Debt is Affordable.”

Pay Colleges and Students for Performance: Among the plan’s new elements, the most problematic to AACC is its proposal to “tie financial aid to college value.” The centerpiece of this proposal, which is garnering much press attention, is to establish by 2015 a new college ratings system based on access, affordability and outcomes measures. Similar institutions would be compared against each other. The administration would then pursue legislation that would use these ratings to steer larger Pell Grants and lower-cost loans to students attending high-performance colleges. Setting aside the inherent complexity of developing appropriate metrics, a “high stakes” scheme as envisioned raises potential issues of equity for community college students, since many of them are not in a position to attend a different institution even if they should want to.

The president’s legislative proposals will also call for awarding colleges a “Pell Bonus” for graduating increased numbers of Pell Grant recipients. AACC supports proposals of this nature but believe that they need to be constructed extremely carefully. The Administration is also proposing to tighten standards of satisfactory academic progress. AACC believes that the current standards, which were modified two years ago, are sufficiently rigorous and that more stringent standards are not necessary.

Promote Innovation and Competition: The plan highlights the use of technology to improve course design and student services. To speed time to degree it calls for more competency-based programs, credit for prior learning, and greater use of dual enrollment. In addition, the plan states, notably, that “earnings information by college … will be released for the first time on the Administration’s College Scorecard this fall.” The source of this information, which is not broadly available at present outside of the “gainful employment” regulatory framework, is not specified.

The plan also renews its existing proposal for a $260 million “First in the World” fund and also notes that a portion of the final, $500 million, round of the Trade Adjustment Assistance Community College and Career Training Program would be used for the development of accelerated degree paths. The plan also reiterated efforts to use the Department of Education’s “experimental sites” authority to promote innovations in higher education, including awarding Pell Grants to dual enrollment students.

Ensure Student Debt is Affordable: The plan calls for making all student borrowers eligible for the Pay as You Earn loan repayment program, and for various publicity and other efforts to ensure that student borrowers, particularly those at risk of default, are aware of their loan repayment options. AACC generally supports these proposals, but notes that most students should be able to retire their student loans in the standard ten year period.

As stated, a number of the proposals contained in the plan require the enactment of legislation, although some key elements, such as the establishment of college ratings, do not. The administration’s plan marks a major development in the ongoing activity regarding the reauthorization of the Higher Education Act (HEA). On August 2, AACC (in concert with ACCT) formally submitted recommendations on the HEA reauthorization to the House Education and Workforce Committee.